Hey, Baars! Please ask me for more complex answers. These are stupidly simplistic.
One: is deflation bad? Keynesians think so, and they are well and truly in charge. But it was Keynesianism that got us into this debt mess.
Two: a low and steady rate of inflation? Again, a dominant ideology (I was 23 years old before someone dropped on me the bombshell that banks loan money they dont have. Say what?)
Fiat currencies not actually literally redeemable for, say, gold can be debased: the Government prints more and more of the units of the currency, so a loaf of bread costs more and more inflation.
Inflation is (my position) a smoke-and-mirrors stunt that goes wrong every single time, though that may take decades.
Three: Can a deflationary crypto solve the problem?
Tl;dr? Theyre our best hope!!
Cryptos arent deflationary in that sense. They are nil-flationary (at least Unobtanium and a number of others).
Deflation is a pickle that an economy gets itself into: prices fall, etc. etc. (But its the Keynesians whod argue its a pickle. Id rather ride it out.)
Heres my take on our present situation:
three or four years ago, it was touch and go whether we would tip towards inflation or deflation. Indeed, some nations presently have inflation even though the global trend is deflationary.
But if you stand back and take a good look, its not simply veering too far this way or veering too far tother. Its clear that the entire global economy is in a tail spin because first we invented bazillions of dollars that weren't 'backed' by any production (but rather a promise of future production! Or not . . . ); and then, when GFC One happened, instead of biting the bullet, and riding bicycles and growing cabbages til the debt was paid, we went on a money-printing rampage.
So, while we get our heads together say, a century the idea of nil-flationary currencies, the idea that one unit of money bought one loaf of bread yesterday, buys one loaf of bread today, and will buy one loaf of bread at any time for the rest of that century, is a really really really good idea (and so is buses pulled through the streets by the long-lunch-ocrats who got us into this mess.
(Except we did nothing, which makes us equally culpable . . . )
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-i think the current system works for the individual as long as he/she understands that papermoney is no store of value (few do understand but they will start to learn once it hurts)
-the system works collectively as long as hyperinflation can be avoided
bottom line: papermoney is there to be used up not to be stored for decades on a bankaccount or elsewhere (contracts like lifeinsurance and such is stupid too)
Inflation is only bad for those who look at papermoney as a store of value.
People will start to learn that paper is worth nothing and has no intrinsic value, this and next decade. Paper is just a promise and promises are broken, no surprise. Crypto and PMs is the place to be because once the masses learn it, there will be high demand for the real store of value things (like Uno and like silver/gold).
I don't worry so much because in extreme cases people just abandon the banks for parts of their service and just go back to silver and gold as money. Who wants paper anyways? Every papermoney in history failed. Gold and Silver never failed for centuries. Papermoney is a stupid idea - always was and always will be.
Maybe deflation is bad for the "economy" BUT consumerism kills the planet anyways. Maybe we go back to have a healthy economy that just produces what people need for living and not tons of trash like all these cheap china-products.
Maybe we will have to buy more regional products again but will it be that bad?
I think crypto will be in demand in the future for the inflation reasons of papermoney. What puts the breaks on crypto adoption is the mental capacity of the average Joe who does not understand any of that. But once it hurts peoples' savings they will be quick to learn.
